The electronic vehicles on display at the North American International Auto Show (NAIAS) in Detroit gleamed just like the other cars at the show, but some people wondered whether they might be losing their lustre at a time of drastically lower petrol prices.
Anyone driving into the show from a Motown suburb could see the jaw-dropping numbers posted outside petrol stations. The lowest spotted in the suburb of Dearborn was 1.67 dollars (about 40 cents per litre). With prices that low, some people wondered why car companies should bother with the expense of developing electric vehicles. The industry's number one cheerleader, Tesla chief executive Elon Musk, begged to differ.
"The main reason I'm here is to talk about electric vehicles and to do what I can to encourage other automakers to accelerate their electric-vehicle programmes," Musk said, speaking at an event sponsored by Automotive News. "If we can make it [the auto industry] go electric sooner, then that will be much better for the world," he said. Musk's question was why more electric vehicles (EVs) weren't on the massive show floor. "It's clearly not front and centre," Musk complained. "I would strongly recommend making significant investments in electric cars."
Earlier Tuesday one of his top executives, Jerome Guillen, said he wasn't seeing much of an impact "at the moment" caused by cheap petrol prices. "Tesla is committed to sustainable transportation," Guillen said. "That gas is cheap doesn't make it any more sustainable." Guillen also said the EV models that were announced at the show, the General Motors Bolt and the BMW i8 to name a few, are not a threat to Tesla, whose Model S is priced at 71,000 dollars.
The cars are made to order and there is a wait time of three to five months. According to industry tracker Motor Intelligence, about 18,000 Teslas were sold in 2014. The competitors are taking notice. GM chief executive Mary Barra said the Bolt would have a range of more than 300 kilometres and would go on the market in 2016 for a price of about 30,000 dollars. Tesla thus far has served the luxury segment of the market, but it is expected to roll out the Model 3 around the same time the GM Bolt is to go on sale and cost around the same amount.
Guillen said his biggest problem is meeting demand for Teslas. The company last year opened stores in China, Japan, Hong Kong, Britain and Australia, bringing to 34 the number of countries where Tesla sells. It calls them stores instead of dealerships in part because there's no dealing; the price is fixed. Analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants in Richmond Hill, Ontario, said Tesla's best opportunity would be in China, although its most recent sales figures from there were not stellar.A battery factory the company is building with Panasonic in the US state of Nevada is another important part of Tesla's story. It is on target to open next year or possibly by the end of this year, Guillen said, adding that increased battery production is key to Tesla introducing a mass-market car.
He said the company's goal is to reduce the cost of the battery cells by 30 per cent. DesRosiers said he loved Tesla's cars and technology, but criticized the company for "gaming the system" by selling credits it receives from the government for having fuel-efficient cars. Under the scheme, the companies can sell them to other companies that need credits because their cars aren't as fuel efficient.
Those regulations, designed to encourage companies to reduce their carbon emissions, have been getting stricter, but DesRosiers said Tesla has used them to their advantage for too long. He also predicted Tesla would have a harder time as it tries to move out of the "skinny niche" it now occupies. "They raised their head and the other automakers are going to hammer it down like a nail," DesRosiers said. "All roads lead to electric, but I don't think it's going to be Tesla in the lead going into the future." Musk said the emissions credits Tesla receives are not a "special handout," but existed decades before Tesla.
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